Leases

We have leases for facilities and office equipment. Our lease liabilities are recognized as the present value of the future minimum lease payments over the lease term. Our right-of-use assets are recognized as the present value of the future minimum lease payments over the lease term less unamortized lease incentives and the balance remaining in deferred rent liability under ASC 840 at September 30, 2019. Our lease payments consist of fixed and in substance fixed amounts attributable to the use of the underlying asset over the lease term. Variable lease payments that do not depend on an index rate or are not in substance fixed payments are excluded in the measurement of right-of-use assets and lease liabilities and are expensed in the period incurred. The incremental borrowing rate on our credit facility was used in determining the present value of future minimum lease payments. The Company does not have any finance leases.

Upon the adoption of ASC 842, we recorded operating lease right-of-use assets of $17.4 million, current and long-term operating lease liabilities of $3.6 million and $14.4 million, and a $2 thousand cumulative adjustment to accumulated deficit.

The impact of adopting the standard on our consolidated balance sheet at October 1, 2019 is as follows:



(in thousands)	Ref	September 30, 2019			ASC 842 Adjustments			October 1, 2019
Long-term assets:
Operating leases right-of-use assets		$	—		$	17,398		$	17,398

Current liabilities:
Deferred rent liability - short-term	(a)	44			(44		)	—
Operating leases liabilities - current		—			3,645			3,645

Long-term liabilities:
Deferred rent liability - long-term	(b)	276			(276		)	—
Unamortized tenant improvement allowance	(c)	297			(297		)	—
Operating leases liabilities - long-term		—			14,372			14,372

Shareholders' equity:
Accumulated deficit		(39,555		)	(2		)	(39,557		)

Ref (a): The balance of short-term deferred rent liability was presented in our most recent annual 10K report within accounts payable, accrued expenses, and other accrued liabilities on our consolidated balance sheet at September 30, 2019.

Ref (b): The balance of long-term deferred rent liability was presented in our most recent annual 10K report within total long-term liabilities on our consolidated balance sheet at September 30, 2019.

Ref (c): The balance of unamortized tenant improvement allowance was presented in our most recent annual 10K report within total long-term liabilities on our consolidated balance sheet at September 30, 2019.

The Company executed a modification of a lease during the fiscal quarter end December 31, 2019 and recognized adjustments to the right-of-use asset and lease liabilities in accordance with ASC 842. As a result of the modification, a gain of $0.1 million was recognized. The gain represents the difference between the change in values of the right-of-use-asset and lease liabilities, which were $7.3 million and $7.2 million, respectively. For the six months ended March 31, 2020, the increase to right-of-use assets and lease liabilities was $24.6 million and $25.3 million, respectively. For more information, refer to Note 6, Supporting Financial Information.

As of March 31, 2020, operating leases for facilities and equipment have remaining lease terms of 0.1 to 11 years.

The following table summarizes lease balances in our consolidated balance sheet at March 31, 2020:



	(in thousands)
	March 31, 2020
Operating lease right-of-use assets	$	22,816

Operating lease liabilities, current	$	1,311
Operating lease liabilities - long-term	22,128
Total operating lease liabilities	$	23,439

The Company's lease costs are included within general and administrative costs and for the three and six months ending March 31, 2020, total lease costs for our operating leases are as follows:



	(in thousands)
	Three Months Ended		Six Months Ended
	March 31, 2020		March 31, 2020
Lease Costs:
Operating	$	1,253	$	2,516
Short-term	47		103
Variable	3		23
Total lease costs	$	1,303	$	2,642

The Company's future minimum lease payments as of March 31, 2020 are as follows:



For the Fiscal Year Ending September 30,	(in thousands)
2020 (Remaining)	$	1,094
2021	3,156
2022	3,244
2023	3,264
2024	3,215
Thereafter	17,776
Total future lease payments	31,749
Less: imputed interest	(8,310		)
Present value of future minimum lease payments	23,439
Less: current portion of operating lease liabilities	(1,311		)
Long-term operating lease liabilities	$	22,128

Other information related to our leases are as fo